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Investors are eagerly awaiting the blockbuster Initial Public Offering (IPO) of Elon Musk’s SpaceX. The space exploration giant filed its prospectus with the SEC last Wednesday, aiming for a listing as early as June 11 under the ticker SPCX. To court retail investors, Musk plans to offer shares through trading platforms like Robinhood(HOOD.US) and SoFi(SOFI.US).

However, if recent history is any guide, buying into the hype on day one rarely yields market-beating returns.

A recent analysis of the 50 highest-valued IPOs over the last five years reveals a sobering reality: investors would have been better off buying an S&P 500 index(SPX.US) index fund in 75% of cases. Even if an investor magically bought all these stocks at their actual IPO offer prices—a near impossibility for retail traders—their average return would be 27% as of May 21, lagging far behind the S&P 500’s 53% gain over the same period. Buying in the open market on a frenzied first day makes those returns even worse.

“Unless you get in early during the pre-IPO stage, it’s very hard to make money,” noted Dennis Dick, a proprietary trader at Triple D Trading.

The Danger of Sky-High Valuations

SpaceX is reportedly targeting a record-shattering $1.75 trillion valuation, a figure that dwarfs every previous Wall Street debut. But big numbers do not guarantee big returns.

Jay Ritter, a finance professor at the University of Florida, pointed out that companies going public with excessively high price-to-sales (P/S) ratios historically underperform. At a $1.75 trillion valuation, SpaceX's P/S ratio nears 100x—massively eclipsing AI titan Nvidia, which trades at roughly 24x sales. Furthermore, SpaceX reportedly lost nearly $5 billion last year.

"Companies with very high price-to-sales ratios all possess highly attractive growth narratives, painting a remarkably bright future. But things can also go wrong," Ritter warned.

A Market of Haves and Have-Nots: AI Chips vs. The Rest

While mega-IPOs have struggled, AI-related chip designers have been the glaring exception. Astera Labs(ALAB.US) and Arm Holdings(ARM.US) have skyrocketed roughly 700% and 400% respectively since their debuts, heavily outperforming the broader market. Cerebras Systems(CBRS.US) is up 52% since its mid-May IPO, though it has cooled off 27% from its intraday highs.

Outside the AI chip frenzy, the landscape is littered with cautionary tales:

• Rivian Automotive(RIVN.US): Once the second-most valuable US automaker, the EV maker has plummeted 82% since its 2021 IPO, currently losing money on every vehicle and burning roughly $1 billion in cash per quarter.
• Figma(FIG.US): The design software firm nearly quadrupled on its first day last July. Today, amidst fears that generative AI will erode its moat, it trades 35% below its $33 IPO price.
• Alibaba Group Holding Ltd. Sponsored ADR(BABA.US): The Chinese e-commerce giant still holds the record for the largest US IPO. Though its stock has doubled since its 2014 debut, it has vastly underperformed the S&P 500, which has surged over 300% in the same timeframe.

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Related US Stock Opportunities & Watchlist

For investors looking to play the broader space, satellite, and tech themes surrounding the SpaceX listing, here is a watchlist of related US equities and funds:

Direct & Adjacent Space Plays:

• Tesla Motors, Inc.(TSLA.US): Musk’s “twin star” offering dual exposure to his leadership in AI and engineering.
• Rocket Lab(RKLB.US): A small-launch leader often dubbed the "mini SpaceX."
• Firefly Aerospace(FLY.US): Focused on fast-response launches and lunar missions.
• Planet Labs PBC(PL.US): A leader in Earth observation satellites.
• EchoStar Corporation Class A(SATS.US): Key player in spectrum and satellite communications.
• Destiny Tech100 Inc(DXYZ.US): A closed-end fund offering pre-IPO exposure to SpaceX.

Strategic Partners & Beneficiaries:

• AST SPACEMOBILE INC(ASTS.US): The "Space AT&T" leading satellite-to-phone tech, with close ties to major telecoms and Google.
• T-Mobile US, Inc.(TMUS.US): A critical partner for Starlink’s “Direct-to-Cell” initiative.
• Alphabet Inc. Class C(GOOG.US): A strategic tech partner and notable SpaceX shareholder (~7% stake).
• QUALCOMM Incorporated(QCOM.US): The chipmaker powering 5G and satellite phone connectivity.
• Amazon.com, Inc.(AMZN.US): A major satellite launch client (despite competing with Project Kuiper).
• flyExclusive, Inc.(FLYX.US): Airline partner utilizing Starlink services.
• Bank of America Corp(BAC.US): A SpaceX financier poised to potentially benefit from massive IPO underwriting fees.

Funds to Monitor:

• ERShares Private-Public Crossover ETF(XOVR.US)/ Fundrise Innovation Fund, LLC(VCX.US): Funds with a "private equity" style that currently hold SpaceX exposure. Note: They may lose their exclusivity premium once SpaceX goes public.

Key Market Risks to Consider:

1. Valuation Height: At 1.75T–1.75T–1.75T–2T, the market may have already priced in years of flawless future growth.
2. Execution Risk: Starship's full reusability is still in the proving phase. Any catastrophic failure could severely hit the stock.
3. Rotation Risk: Institutional capital may drain out of smaller, speculative space stocks (like RKLB, ASTS, DXYZ) as funds reallocate cash to buy into the SpaceX mega-cap.